Sandesh Projects Pvt. Ltd. Vs ITO (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal partly allowed the appeal filed by Sandesh Projects Pvt. Ltd. for Assessment Year 2010-11. The principal dispute concerned an addition of Rs.46 lakh under section 68 of the Income-tax Act, 1961, representing Rs.23 lakh each received as share capital from Casper Enterprises Pvt. Ltd. and Duke Business Pvt. Ltd. The Tribunal deleted the addition, holding that the assessee had discharged its initial onus by producing substantial documentary evidence, while the Assessing Officer had relied principally on the statement of an accommodation entry provider without making adequate enquiry into the evidence furnished by the assessee.
The assessee, engaged in real estate development, had filed its return declaring total income of Rs.30,550. The assessment was subsequently reopened after the Assessing Officer received information from the Investigation Wing concerning accommodation entries. It was alleged that the two companies which had invested Rs.23 lakh each in the assessee were operated by an accommodation entry provider and that the investments represented accommodation entries. The assessee requested the reasons for reopening and objected to the reopening, but the objections were rejected.
During the reassessment proceedings, the Assessing Officer required the assessee to establish the identity, creditworthiness and genuineness of the investors. The assessee furnished share application forms, investment confirmations, board resolutions, share certificates, bank details, affidavits of directors, audited financial statements, income-tax returns and other corporate records. It also provided information concerning the investors’ share capital and reserves and explained that the payments had been received through account-payee cheques.
